NFV and SDN begin to yield cost savings and prepare carriers to be competitive in the digital era

HAMPTON, N.H. (July 3, 2018) — Commercial deployments of NFV and SDN are aggressively moving forward, with nearly all leading Tier 1 operators having adopted or planning to adopt NFV and/or SDN by the end of this year, according to Technology Business Research Inc.’s (TBR) 1H18 Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study.

“The cost savings of network virtualization and automation is becoming more evident,” said TBR Telecom Senior Analyst Michael Soper. “Carriers are leveraging NFV and SDN capabilities, as well as integrating cognitive technologies such as artificial intelligence (AI) and machine learning (ML) to evolve to a zero-touch network that can automate performance management and maintenance functions to prevent network faults and reduce expenses. The industry is in the very early stages of this trend.”

WAN virtualization is a top priority for service providers as they implement solutions including SD-WAN and WAN optimization into their portfolios. Service provider revenue growth from software-mediated network services, particularly SD-WAN, is accelerating, but the lion’s share of WAN revenue continues to stem from traditional services such as MPLS.

The supplier landscape shows incumbent vendors, particularly hardware suppliers, remain entrenched with service providers, but face disruption within certain use cases and with respect to commoditization. The study indicates incumbent hardware providers are best-positioned for providing NFV and SDN solutions across domains, with startups, open source players and cloud-centric vendors infrequently mentioned by respondents. Still, incumbents will face disruption with respect to certain VNFs, such as vEPC and vRAN, and the most significant threat remains hardware pricing, the area in which the overwhelming majority of respondents expect to see cost savings due to commoditization and the shift in spend to the software layer.

As the software-mediated market matures, software-centric vendors will be better-positioned than hardware-focused competitors. Additionally, vendors with highly automated service delivery and remote delivery capabilities can help service providers reduce opex tied to NFV and SDN.

TBR’s Telecom Software Mediated Networks (NFV/SDN) Customer Adoption Study provides an in-depth examination of how operators are planning, preparing and executing to succeed in the NFV and SDN market. TBR surveyed 25 of the leading Tier 1 telecom service providers worldwide to gain insight into their NFV and SDN adoption plans. The study includes insight into service provider strategy, as well as service providers’ perceptions of supplier positioning and key benefits and obstacles.